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Wall Street braces for an Obama win

The business community tends to play percentages and right now they favor the president. | AP Photo

Privately, executives are a little less sanguine. “There’s still opportunity for Romney to catalyze and shake up the race and break through this narrative,” said one senior executive at a large bank who has supported the Romney campaign and who declined to be identified by name to speak openly. “But he has got to somehow make this a referendum election and not a choice election. And if he doesn’t do that — and I’m not so sure he can at this point — then he is not going to get the golden ticket.”

In large part, the executives are reacting to a growing pile of data suggesting the election is moving away from Romney.

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All three so-called prediction markets, in which people bet on the election outcome, give Obama between 70 and 80 percent odds. PredictWise, which averages the three major indices, has Obama at 77.1 percent.

It’s a remarkably large spread according to Justin Wolfers, a University of Pennsylvania Wharton School economics professor who has published research on the subject. “It’s not unusual for the incumbent to be ahead by a few points this far out. What is unusual is the view [reflected in the numbers] that there is unlikely to be any large movement between now and Election Day,” Wolfers said.

He added that the surveys suggest Obama is mostly viewed as a lock by investors with 20 or so percent betting on some major event between now and Nov. 6 destabilizing the race in Romney’s favor.

Romney backers on Wall Street and in corporate America also mostly discount the tight national numbers and obsess over recent polling out of Ohio, Virginia, Florida and other swing states showing a growing Obama advantage and a very challenging road to 270 electoral votes for the GOP nominee. And they point to data showing Obama has drawn even or moved ahead as the candidate most trusted to deal with the economy and jobs as voters grow increasingly confident about their future prospects.

On Tuesday, for instance, the widely followed Conference Board measure of consumer confidence surged to 70.3 from 61.3 last month. House prices are also on the rise again which boosts sentiment. In the most recent Wall Street Journal/NBC News poll, 42 percent said the economy would improve over the next year, the biggest number since 2009.

And the Dow is up nearly 50 percent since Obama took office, meaning workers’ 401(K) statements look better, further negating the so-called grumpy voter effect that was previously seen as likely to push undecided voters Romney’s way.

All these numbers have led to a recalculation in corporate boardrooms and D.C. lobby shops.

Inside the Beltway, financial services lobbyists are starting to hedge their bets. For many in the industry — private equity, hedge funds and investment banks — the ramifications could be huge if Democrats retain the Senate and Obama is leading the effort to a major tax overhaul.

Perennial issues like carried interest, a favorite hobby horse of Senate Democrats, could be on the chopping block. The industry most certainly would be on the defensive, according to several financial services lobbyists. And the optimism that agency heads would change and new rules in the pipeline like the Volcker Rule would vanish or get watered down is no longer the case.

Despite the most recent polls and economic forecasts, not all banking lobbyists are willing to concede the election. “The banking industry knows for them this is by far and away the most important election, bar none,” Consumer Bankers Association President Richard Hunt said, noting the headwinds against banks will be much stronger in a second Obama administration.

So the fight continues. But confidence among corporate executives that they could get one of their own in the White House is clearly ebbing.

“The silver lining is that there is probably going to be a better economy with Obama or without him,” said a forlorn senior Wall Street executive. “It’s just going to be a little slower with him. But people are kind of getting resolved to it.”

This article first appeared on POLITICO Pro at 6:13 a.m. on September 27, 2012.

Readers' Comments (129)

Wall Street is definitely hedging their bets. But that is what Wall Street does. They don't like to take chances, and they always have a plan B, C, and even D.

But their worst fears will NOT be realized. Romney will appear competent, knowledgable, and not at all "scary" on TV during the debates. Once the public sees that he is a reasonable alternative to Obama, they will move to support him and reject a President that has shown himself to be inept in domestic and foreign policy.

Everyone has one vote. The GOP lead by Romney is schizo and becoming a fringe. They only like "big" government when it is slanted towards their ideas. Not an honest fair approach to governing. Mitt laid his cards on the table during that fund raiser. He continues to take different position on all issues through out his political career. He is trying to reset the level of disclosure concerning his taxes. Everyone dislikes the national dept. However, both parties got us in this situation. If Obama had not taken steps to save the auto and financial industry things would have been worse. If GOP is concerned about the national dept. Give up your sacred subsidizes that go against the national credit card. Enough with my rant this morning. Wall Street will continue to make money regardless of who is in office.

This election has nothing to do with who is more qualified. It's all about race! Blacks feel this is their moment and they are not going to let it go. They don't care if Obama stops free speech in the morning, it is what it is. Those white people are trying to get this guilt that they owe the blacks something. Who wouldn't vote for someone giving everything away? He doesn't care if you work or not, as long as you need government money to live he gets the vote. People are not listening and they don't care to listen. I'm a single mom and I was way better off 4 years ago. I use to be middle class, now I'm the working poor trying to survive. They can give me all my money I put in SS and I will handle it myself. Obama has made this into a race debate, sad for the country, but he doesn't really care as long as he gets voted in again. Sorry to say we will probably have another 4 years of this clown, just hope we can put it back together when he's finally gone!

Fluff piece. No story here. In spite of the fact that the Dow has doubled since 2009, the trolls insist on their alternate reality. Americans vote with their pocketbooks and the polls show Obama in a runaway.

The various media outlets have a real vested interest in making this appear to still be a 'horse race', but the fact is this election is over. Never in history has a candidate had such negatives and been so behind in the polls as Robme and still won, so give it up! Voting has already started in many places and Republicans are not only going to lose the White House but this is setting up to be such a landslide it may wipe out the House too. This is the end of the 'Jesse Helms' model to win elections for the Republicans and the end of the latest 'Robber Baron' society that we have let creep back into our culture. Bring back the 1950's top tax rate of 90% and put the estate tax back where it was then and the budget will be balanced and Social Security and Medicare and Medicaid will be funded with excess. And by the way that period of history had the greatest economy and middle classs ever!

“We don’t really care if our taxes go up a little if we can just get this done and take this threat away from the economy,” the executive said, adding that support from CEOs could give cover to Republicans in Washington concerned about supporting any new taxes and angering tea party hardliners and anti-tax advocates such as Grover Norquist.

f wall street! these crooks were bailed out by GW and Obama and they seem to forget that the people who saved their asses were the average joe's they still seek loopholes to exploit. this is why 75% of americans support the stronger regulations.

Poor rich babies! They have fared better than any other group during the Bush Great Recession and GOP-Phil Gramm-enabled subprime mortgage Wall St. rich bankster fraud that took down Wall St. and the economy. Having taken $15 trillion from Americans' household wealth or more than all the crooks and thieves that have ever lived, notice that none went to jail and they kept their huge bonuses with their GOP-created tax loopholes for the rich like Romney's "carried interest" reduced taxes on his huge Bain Capital salary at 15% not 35% and the reduced wealth income taxed also at 15% not 35% coupled with tax-dodging offshore, overseas, and Swiss bank accounts.

Indeed, income increases for the top one percent, which went up 275% under GOP "trickle-down" administrations from 1979-2006 while the Middle Class declined due to lower union membership and the loss of manufacturing jobs including five million under Bush-Cheney and left behind stagnant wages for the 99%, are still up for the rich by 16% as the rest of America struggles.

Notice how the rich, rich corporations, and rich special interests are still bankrolling the failing Romney campaign hoping to put yet another rich Republican businessman in the White House to favor their monied interests. Some of the rich Wall Streeters miss Pres. Clinton. Why, because he compromised with the Republicans and Greenspan and allowed the Glass-Stegall Act to be repealed that led to banksters getting into investments, even against their own clients' interests, to the securitization of bad loans and exotic financial instruments like derivatives that have caused huge losses and a huge strain on the US economy, our crippling National Debt with compounding interest, and the long-term future of America.

The super rich can take big financial hits without pain. Nobody has to sell their homes, go without necessities like food, medicine. clothing, shelter, college education, etc. Yet, there is no indication that anything has changed on Wall St. or that another financial fiasco cannot happen again. The party of the rich Republicans, after all the harm they have caused, are still pushing the same programs and policies that have mortgaged America's future while spreading death and misery at home and aboard. That any working class American would ever support the Republican Party which has NEVER represented them is beyond reason.